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Business Insurance for an LLC: How Do You Know If You Need It?

3-minute read

Mariah Bliss

Mariah Bliss

25 May 2022

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As business owners, every day presents us with new decisions. Whether it's which lease to sign, which tools to use, or how to advertise our services, each choice has an impact.

Deciding if you need business insurance is one of the most impactful choices you can make for your company. But how do you know if you need business insurance for an LLC?

That’s where we come in. We’ll go over the signs you need business insurance for an LLC, as well as cover how much you can expect to spend on LLC insurance.

What is Business Insurance for an LLC?

Business insurance for an LLC is an umbrella term that’s used to describe the different policies that can be bundled together to protect a limited liability company, like your business.

Depending on what your LLC does or what risks you’re exposed to, your LLC insurance choices could include:

  • General liability insurance
  • Professional liability insurance
  • Workers compensation insurance (if you have employees)
  • Cyber insurance
  • And more

Is Insurance Required for a Business Registered as an LLC?

Depending on your state and the type of work you do as an LLC, you may be required to have business insurance. If you want to see what your state requires, check out our business insurance by state hub and click on your state to learn more.

Do you need business insurance for an LLC?

Even if your state doesn’t require coverage, here are a few other signs you may need business insurance for an LLC:

1. You’re working with larger customers.

You may be at the point where the majority of your customers are businesses rather than individuals (e.g., your landscaping business handles a lot of office buildings and commercial locations rather than private homes). Having LLC insurance is often required to get through the vendor approval process you’ll likely encounter.

Plus, it can help you look more like a serious player when you’re going after the business. It can show a potential customer that you’ve taken steps to protect yourself and your business from liability. This matters, because if you don’t have coverage, the liability for a claim could fall on them.

2. You’re looking for funding.

Much like large customers, banks and other financial institutions will likely want to know you have the right insurance coverage before they approve any type of loan. They want to make sure a lawsuit doesn't shut down your business and prevent you from repaying your loan.

The same can also be true if you’re thinking of bringing on new members to your LLC ownership group. They want to feel confident that there’s protection for their investment.

3. You have a website.

It’s extremely rare to be in business today without a website or other type of online presence. And whether you're 100% online or not, there still can be online risks to your business.

These often fall into the category of “advertising injury.” They include claims of stolen ideas; invasion of privacy; and libel, slander, and copyright infringement related to advertising. That’s where general liability insurance can help.

For example, based on your knowledge, you claim on your website that a competitor’s product causes hair loss. Turns out that’s not true and your competitor sues you for libel. Without insurance, you could be responsible for paying any settlement and any associated legal fees.

Advertising injury also can occur from seemingly good intentions. Perhaps you have a customer who sent you an email with a glowing review. You’re excited and publish their comments and their picture on your webpage.

Unfortunately, you didn’t get permission to use their image and review, and they bring a claim against you for violation of privacy.

Having general liability insurance can help cover your legal and settlement costs from the case.

4. You like to sleep at night.

Running a small business is no small endeavor. Marketing, hiring, planning, billing, payroll — there’s a good chance all that falls on you. Then, somewhere among all those tasks, you need to actually do whatever it is you do to generate some income to keep the lights on.

And those are just the things you know about and can expect. Unfortunately, 43% of small business owners polled reported being involved in a lawsuit or threatened by one.

The last thing you need is a nagging worry that you could be at risk of losing everything you’ve worked so hard for. The first thing you can do to help erase that concern from your mind is to get the LLC insurance that’s right for your business.

That’s where we come in. We specialize in business insurance for LLCs, sole proprietorships, and other types of small and micro businesses. We’ve helped thousands of business owners get the coverage they need, and in turn, the sleep they need as well.

Get Insured in Under 10 Minutes

Get an affordable & customized policy in just minutes. So you can get back to what matters: Your business.

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How Much is Business Insurance for an LLC?

LLC insurance is surprisingly affordable, especially here at Simply Business.

In fact, LLC business insurance costs can start as low as $21.25/month (general liability insurance only). The rest of our policies are just as affordable, meaning you can get protection without breaking your business’s budget.

Learn more about how much business insurance costs.

Good LLC Insurance is Worth Having

Now you know the steps you can take to find the right LLC business coverage and just how important it can be for your business's success. Once you're covered, you can move forward to running your business and doing what you love!

*Monthly payment calculations (i) do not include initial premium down payment and (ii) may vary by state, insurance provider, and nature of your business. Averages based on July-September 2023 data of 10% of our total policies sold.

Mariah Bliss

Written by

Mariah Bliss

I love writing about the small business experience because I happen to be a small business owner - I've had a freelance copywriting business for over 10 years. In addition to that, I also head up the content strategy here at Simply Business. Reach out if you have a great idea for an article or just want to say hi!

Mariah writes on a number of topics such as small business planning, contractor insurance, and business licenses.

This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer

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